What Is Even Happening with Bitcoin Right Now
A civil war brewing over a minor software change.
So, how are things going with that whole Bitcoin thing? Oh, not much, not much, there's a new Bitcoin client that everyone's talking about, with some tweaks to the protocol. Also a major subreddit is censoring all discussions of the new client and Satoshi Nakamoto has apparently returned like an ancient god waking from his magic slumber, only to send out extremely unhelpful emails to public mailing lists.
Timothy B. Lee at Vox calls it a "constitutional crisis," an awfully serious take on an internet drama that more closely resembles a LiveJournal fanfiction community meltdown after everyone finds out that J.K. Rowling kills Dumbledore.
Here's what happened: Two Bitcoin developers—Gavin Andresen and Mike Hearn—tried to convince the core developers to change the basic Bitcoin protocol. Andresen is part of the core team and has been with Bitcoin nearly from the beginning (he was one of the last people to have contact with Satoshi Nakamoto before his "return" during the Dorian Nakamoto incident).
Regardless, the core team didn't want to make these changes, so the two devs ended up releasing their own client, BitcoinXT, which makes Bitcoin blocks larger. The change is an attempt to "scale up" Bitcoin, which is currently headed towards "maximum capacity."
"The developers of this pretender-Bitcoin claim to be following my original vision, but nothing could be further from the truth."
The part that has everyone in a tizzy is that BitcoinXT has the potential to "fork" the blockchain. Right now, BitcoinXT users and vanilla Bitcoin users live in the same coin universe, where transactions all get recorded in the same ledger. If BitcoinXT is used by 75 percent of all nodes, it will end up going its own way due to compatibility issues with vanilla Bitcoin. So the 75 percent will be living in the new canon Bitcoin, while the 25 percent will find themselves stranded in an alternate universe. So mass adoption of BitcoinXT could strong-arm some people into changing how Bitcoin works.
The bigger blocks are meant to solve the "maximum capacity" problem. Bitcoin is getting slower and slower as adoption increases over time. It handles tens of thousands of transactions a day; Visa handles hundreds of millions. Many are hoping that Bitcoin "scales up" and becomes a viable competitor to mainstream payment networks. Based on theoretical models, large block sizes would achieve this goal. Andresen and others have concluded that it is necessary to increase block size. Many disagree that this is the appropriate way to scale up.
Mike Hearn, in an essay originally posted on Medium and republished at Ars Technica, argues that, based on old emails written by Satoshi Nakomoto, Satoshi's original intent was to move towards the larger block sizes.
That's about when Satoshi Nakamoto, the once and future king of Bitcoin, suddenly reappeared on the bitcoin-dev e-mail list to angrily condemn the neat piece of theological interpretation that Hearn had put together. "The developers of this pretender-Bitcoin claim to be following my original vision, but nothing could be further from the truth," he wrote.
The community is split on whether this is even the real Satoshi. His e-mail did get hacked once, but this is a different address. It's one that was used by Nakamoto to announce the original Bitcoin white paper, and the email headers check out as authentic. The big thing is that the Satoshi email isn't signed with his PGP key—but that's not necessarily proof of fraud. Maybe the Satoshi email is from an impersonator! Or maybe Satoshi just misplaced his PGP private key, like 90 percent of people who try to use encryption do at least one point in their lives, and he's just too embarrassed to tell anyone!
Meanwhile, the mods of r/Bitcoin have been actively censoring discussions of BitcoinXT over some furious objections:
Some are speculating that the addition of five new moderators is to keep up with the ongoing censorship.
Not that it seems to be effective—most of the "hot" discussions on r/Bitcoin right now implicitly reference the BitcoinXT drama, although none of them actually use the term "BitcoinXT" in the subject line.
Oh, also, the price crashed almost a hundred dollars yesterday, probably because of the ongoing debate.
Keep in mind that this whole flame-out is over a fairly technical "fix" to Bitcoin, the kind of detail, where if this were any other piece of software, would make for a dull patch note to a mandatory update. People aren't angry because this change is a big deal, people are angry because all change is a big deal. If this is a "constitutional crisis," it's only because thousands of little Scalias are losing it over the Constitution being interpreted for a time where people aren't riding horses and pooping in buckets.
Correction: An earlier version of this story said Satoshi Nakamoto "returned like an ancient god waking from his magic slumber," before going on to note that this Satoshi Nakamoto is almost certainly an impersonator. We had assumed that when talking about an anonymous persona reappearing as a godlike energy it would be clear that we were not talking about the corporeal being or beings who initially created the Satoshi character, but as that may have been confusing, we've added the word "apparently" to this sentence in order to clarify.
Motherboard regrets the error.